Competition fears dog British Airways tie-up
October 27, 2009
The proposed transatlantic alliance between British Airways and American Airlines looks set to run into familiar difficulties, according to The Financial Times.
European regulators have resurrected concerns that any tie-up would stifle competition on transatlantic routes from Heathrow Airport, potentially driving up fares.
In a confidential document sent to the carriers, Brussels said that closer cooperation between BA and AA appears "likely to result in appreciable competitive harm".
The airlines have twice before sought anti-trust immunity on their transatlantic services.
They insist that coordinating flight schedules, booking engines and ticket prices will enable them to boost efficiency, in turn delivering lower fares to the flying public.
But rival carriers such as Virgin Atlantic have vociferously opposed the move, warning that it would give BA and AA unfair dominance on key routes from Heathrow.
Writing in The Telegraph last year, Sir Richard Branson claimed that the merger would leave BA/AA operating 100 per cent of all flights between Heathrow and Dallas; 79 per cent between Heathrow and Boston; and 63 per cent between Heathrow and New York JFK.
Echoing those concerns, the European regulators look set to call on the airlines to relinquish some of their lucrative slots at Heathrow before any deal can go ahead.
Officials in Brussels were quoted by The Financial Times as saying they "[e]nvisage issuing a decision finding that the series of agreements signed have been in breach" of competition laws. "Remedies may include ... the transfer of airport slots" to other carriers, they added.
For its part, BA points to the existing anti-trust alliances for the Star group of airlines based at Frankfurt and the SkyTeam carriers at Paris Charles De Gaulle.
Both of those alliances operate with far higher market shares at their home bases (80 per cent and 73 per cent respectively) than BA at Heathrow (51 per cent). But in terms of Available Seat Kilometres, BA and Heathrow remain the dominant transatlantic force.
Britain's flag carrier has also been quick to argue that the new Open Skies treaty enables any airline to add new routes from Heathrow, though with pairs of landing slots at the overstretched UK hub costing as much as £30 million barriers to entry remain immense.
The news from Brussels comes as 14,000 BA cabin crew prepare to be balloted over possible strikes prompted by changes to working practices and a recent spate of redundancies.
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